With hundreds of new apartments opening each month in central Ohio, how many more does the area really need?
A lot more, experts say.
About 15,000 new apartments — 3,000 a year — have been added in central Ohio over the past five years, from New Albany to Grove City, Dublin to Downtown.
If that seems like a lot, consider this: During the same period, central Ohio added 139,475 residents.
“I think we could probably support another thousand units (a year) to meet demand,” said Rob Vogt, managing partner with the Columbus-based real estate research firm Vogt Strategic Insights.
The commercial real estate firm CBRE and real estate information service CoStar arrived at the same conclusion: Columbus could build more new apartments than it is now.
“The main reason I think Columbus is underbuilt is the speed at which the new supply is being filled up,” said Ben Atwood, a market analyst with CoStar, the parent company of Apartments.com.
“With the university there, that provides a never-ending pool of renters,” said Atwood, who is based in Washington, D.C. “Columbus is unique in the Rust Belt. It’s drawing residents from all across Ohio and is pulling from Michigan, Kentucky and Indiana, so I think there’s plenty of room for growth. I see no reason for it stopping, barring a recession. You have people aging out of apartments, but there’s just a massive influx coming in every year..”
Population growth fuels demand, but even more important is job growth. Vogt’s research found that since 1991, central Ohio has needed one new home, apartment or house for every job created. Since 2014, however, central Ohio has added more than twice as many jobs as homes, creating a tremendous unmet demand.
In addition, younger tenants are renting longer — in part because they are marrying and having children later — and more empty nesters are choosing to rent than own. According to the listing service RentCafe, the number of renters over 60 has risen 43 percent over the past decade.
“Millennials are renting much longer, so they’re not buying homes right away. They’re renting all the way into their early 30s,” said Brian Schottenstein, president of Schottenstein Real Estate Group and this year’s president of the Columbus Apartment Association. “Empty nesters are also downsizing, selling their homes. They don’t want to worry about the maintenance of a home.”
The Columbus developer Casto just finished the last building at its Westerville complex HQ Flats, and it already is 80 percent leased. Demand has been so strong that Casto is about to start phase two of the project, adding 220 apartments to the 342 already there.
“My feeling is that we still have a good runway ahead of us for new product,” said Brent Sobczak, president of Casto Communities. “People are renting longer and people are starting to downsize and rent instead of own. They are renting by choice.”
Karen Bokor moved into her 1,200-square-foot apartment at The Dennison in Victorian Village in January. The empty nester knew she wanted to be in an area of town where she could walk everywhere and be in the heart of the city.
“I transitioned from a pretty large house in the suburbs … and it just felt like home without having to decide permanently where I want to relocate,” said Bokor, 53.
Apartments at The Dennison, which start at $1,620 a month, offer a view of Goodale Park.
“For the first time in my life I don’t have to do any yard work and I have a bigger backyard than I did before,” said Bokor.
Apartment construction is booming nationally, not just in Columbus. Nashville added 5,315 apartments last year, Indianapolis 2,030, Austin 6,446 and Charlotte 6,377, according to CoStar.
With several new complexes under construction or poised to open in central Ohio, demand will continue to be tested. More than 40 apartment complexes are underway throughout central Ohio that will add thousands of apartments.
New complexes include The Ave, on Indianola Avenue in Clintonville, with 301 apartments; The Nicholas, with 232 apartments Downtown; Jerome Grand, on Post Road in Jerome Township, with 300 apartments; and the 599-unit Highlands, on the site of the former Anderson’s store, near W. Dublin-Granville and Sawmill roads.
Projects on the horizon include 600 apartments at Hayden Run and Avery Road (in addition to the 318 already open at the Charles at Riggins Run); more than 600 at Jeffrey Park in Italian Village; 360 apartments at Norton Crossing in Whitehall; and 264 apartments at Beulah Park Living.
Despite the eruption of new apartment buildings Downtown, far more apartments are being built in the suburbs and fringe of Columbus than in the urban core. Last year, seven apartment buildings opened Downtown, with a total of 455 apartments, fewer than the 599 apartments that the Highlands complex alone will include on the Northwest Side.
Strong demand continues to push rents up. For four of the past five years, the average rent in central Ohio has risen at least 4.4 percent. Put in dollar terms: The average central Ohio rent rose from $758 in 2013 to $942 last year, according to Vogt.
While the $1,500-a-month hardwood-and-granite one-bedroom apartments Downtown and in the Short North get the attention, Vogt’s study illustrates that the big rent jumps are in the older apartments. The average rent in apartments built after 2009 rose 4 percent last year, but the average rent for apartments built in the 1980s rose almost twice as much — 7.3 percent, from $905 to $971 a month.
One reason rent has jumped so much in older apartments is that many complexes have been bought and renovated.
“Investors are coming in and taking Class C product and raising it to a B+ and raising the rent,” said Antoine Matthews, a capital markets advisor with the Columbus office of CBRE. “That puts a lot of pressure on affordable housing. It’s something we all need to be aware of.“
jweiker@dispatch.com